2. In this appeal, the assessee has raised the following grounds :

"1. The learned CIT(A) has erred in law and in facts in confirming the action of learned Assessing Officer in disallowing expenditure of Rs. 17,88.062 being overload charges incurred in the normal course of business of the assessee by treating the same as penalty without appreciating the true and correct nature of such expenditure.

2. The learned CIT(A) has erred in law and in facts in not following the order of his predecessor for assessment year 2004-05 wherein under identical circumstances, such expenditure has been deleted by learned CIT(A).

3. Both the lower authorities have erred in law and on facts in not properly appreciating and considering various submissions, evidences and supporting (sic) placed on record during the course of the assessment proceedings and not properly appreciating various facts and law in its proper perspective and further erred in passing orders in gross violation of the principles of natural justice.

4. Learned CIT(A) has erred in law in confirming the levy of interest under section 234A/234B/234C of the Act.

5. Learned CIT(A) has erred in law and on facts in upholding the action of the Assessing Officer in initialing penalty under section 271(1)(c) of the Act without recording mandatory satisfaction as contemplated under the Act."

3. As regards ground Nos. 1 to 3 of the appeal brief facts of the case are that the assessee is a private limited company engaged in the business of transport contractor and fleet owners. The Assessing Officer observed that on verification of audit report in Form No. 3CD, it was found that in column No. 17E, the auditor had put a remark as under :

"Penalty is there except overload penalty which is in normal course of business and hence not reported."

The Assessing Officer vide his letter dated 14-2-2007 asked the assessee to furnish details of such penalty. In response to this query, the assessee vide its letter dated 11-5-2007 submitted as under :

"As per para (a) your letter dated 14th Feb., 2007, your goodselves have stated that the auditors have mentioned a note in tax audit report that penalty on account of overloading is not reported by them. Your goodselves has asked us to furnish complete details of such penalty.

In this regard it is to submit that the penalty is not there in each and every case. We are engaged in transportation of liquid cargo hence the chances of overload are less however if any penalty for overload is there that is normal business expenditure because corresponding income for the same is also billed to the party which is billed per MT of the cargo. Further it is to submit that Gujarat Government had come out with a scheme of Gold Card which entitled every transporter to have overloaded vehicle for that particular month on payment of the additional fees fixed for that Gold Card as such the same is a normal business expenditure only which was allowed by the Government also after payment of requisite fees. Further the composition fee is paid to various RTO authorities which entitles a vehicle to carry the overload after payment of the composition fees. If this would have been a penalty, the RTO authorities would have forced the vehicle to pay the penalty and unload the excess load, which is not the case in any of the amounts paid as composition fees. The vehicle is permitted to carry the excess load which they have carried till the destination.

Hence, the same should not be termed as penalty otherwise the RTO authorities would have forced to unload the excess weight carried by the vehicle after the penalty. This is only a payment to Government of taxed which otherwise the vehicle had paid less for passed loan only. In case the load is on basis of total quantity including the excess load quantity. Hence the same s